LONDON, U.K. - In a deal worth $3.6 billion, Britain's Cineworld Group has agreed to buy larger U.S. peer Regal Entertainment Group on Tuesday.

The deal worth $3.6 billion in cash, would lead to the creation of the world's second-largest movie theatre operator.

Regal, which is three times larger than Cineworld by market value has said that the combined company would have about 9,542 screens, with 7,315 screens in the United States.

Facing competition from digital streaming platforms that continues to draw movie-goers away, movie theatres have been struggling to win back viewers.

The takeover is seen by analysts as an attempt to help put the combined company in a better position to take on industry leader AMC Entertainment Holdings.

It is also aimed at giving the combined company more scale to fight growing competition from Netflix Inc, Apple Inc and other digital outlets.

Cineworld Chief Executive Mooky Greidinger said in a statement, "When they go to the cinema, they go to the cinema and who loves to go to the cinema more than the Americans?”

He said, "Regal is a great business and provides Cineworld with the optimal platform on which we can continue our growth strategy. Both companies are strongly committed to bringing a high-end cinematic experience to their customers. Consolidation is an important move forward and the best practice we have successfully rolled out across Europe will be the key driver to continued success."

Greidinger said that he expects to boost margins and revenue at Regal, adding that Cineworld currently has margins of 22 percent.

Regal meanwhile has margins of about 19.6-19.7 percent.

Regal Chief Executive, Amy Miles, said, "We are excited to have reached an agreement with Cineworld, at a price that represents a meaningful premium on Regal's unaffected share price for our shareholders.”

Analysts said that Cineworld’s bid was considered well-timed as shares in the U.S. company have plunged more than 20 percent over the last year on concerns over stagnant admissions at theatres.

On Monday, the deal value of $23 per Regal share represents a premium of about 12 percent to Regal's closing price on the day and implies an enterprise value - equity plus debt - of $5.8 billion.

Since reports of a possible deal first appeared in November, Regal shares have risen 13.6 percent.

In the period, Cineworld shares have fallen about 20 percent.

Cineworld has said that it expected the deal to "strongly" add to earnings in the first full year following completion, currently expected in the first quarter of 2018.

Both the companies have said that the combined company is expected to deliver pre-tax benefits of $100 million, as well as additional annual benefits of $50 million.

Cineworld added that it expected to fund the deal through a rights issue to raise about $2.3 billion, with the rest provided by committed debt facilities and existing cash.

Cineworld added that it expects to be able to maintain its existing dividend policy after the deal closes.